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Ethiopia: On her way to become Africa's major tourism hub

By Muna AhmedTigrai Onlne - June 10, 2014

Last week, we have read that a premier tourism industry investments forum scheduled to take place in Nairobi has been relocated to Addis Ababa. UK based Bench Events who are the organizers of the Africa Hotel Investment Forum (AHIF).

In their official website, the organizers of the conference published the following statement:

The Axum Obelisk in Tigrai northern Ethiopia is 24-metres (78-feet)weighing about 160 tonnes and it is curved from one solid granite stone. The Obelisks are 2000 to 3000 years old and they are registered by UNESCO as world heritage.

Bench Events, the organiser of the Africa Hotel Investment Forum (AHIF) has announced that the event will now take place at the Sheraton Hotel in Addis Ababa, the capital of Ethiopia on 29th Sept – 1st Oct.

"I am very pleased that the next AHIF will give us the opportunity to take a closer look at Ethiopia. It has a tourism economy that is currently growing at 4.5% per annum and that the World Travel & Tourism Council expects to grow at 4.8% per annum for the whole of the next decade. That, coupled with its good air connections, make it a destination we want to explore more carefully. With AHIF here, we will have a great opportunity to meet good quality prospective local partners, which is an essential first step in making a successful hotel investment anywhere in Africa."

AHIF was due to take place in Nairobi but a surge in interest from sponsors wanting to use the event for networking and promotion of their businesses led to concerns over physical space to accommodate increased numbers. Matthew Weihs, Managing Director, Bench Events, said:

"The speed of demand from new sponsors has taken us by pleasant surprise. I'd like to thank the InterContinental in Nairobi for being instrumental in allowing us to nurture this event. However, with over 4 months left, we've already reached capacity and with a strong pipeline of exhibitors, we felt a move to a bigger location now would mean we'd not have to disappoint anyone and we'd also be better able to reflect the growth story of the continent."

Bench had booked in to the largest five star hotel in Nairobi but looking at the physical layout, it could just not see how to fit in all the exhibition stands and all the people saying they want to come." Last year's conference attracted four hundred delegates and 27 corporate sponsors. Already, a similar number of sponsors has signed up and there is a pipeline of others, all expressing strong interest."

The decision was further influenced by arguments from Ethiopian Airlines about its extensive route network in Africa, a highly competitive offer from the Sheraton Hotel in Addis Ababa and feedback from delegates requesting the event to keep changing destinations to enable them to capture a double benefit when attending AHIF of networking and widening their knowledge of Africa.

While that was good news for all Ethiopians and friends of Ethiopia, it was not entirely an unpredicted development. Rather an outcome and a confirmation of the two decades long works.

Ethiopia is blessed with abundant natural tourist attractions. However, the Tourism industry struggles to attract tourists in decent numbers owing to poor investment. Especially, in the previous regime, frequent food crisis, civil war and absence of a clear tourism development or promotion strategy affected the image of the country and the security of prospective travelers. As a result most tourists used to fly over Ethiopia to Kenya, Uganda, Tanzania, and South Africa to name a few countries.

Since 1991, the Government of Ethiopia worked to remove constraints relating to visa and customs regulations, with a view to facilitate growth in Ethiopia’s tourism, in addition to tax and customs incentives to encourage investments in hotel and tor services. The Government has embarked on a number of measures to preserve and develop tourist sites throughout the country and to increase revenue earnings from the tourist sector.

As researches indicate, it was only in mid-1960s that tourism was taken as a potential area of economic growth. However, following the ascendance of the Dergue regime to power, the sector declined.

From 1974 for two decades the Ethiopian tourism industry suffered from the adverse effects of a prolonged civil war, recurrent drought and famine, strained government relations with tourist generating countries, and restrictions on entry and free movement of tourists during the military government from 1974 to 1991. During this period, apart from periodic upgrades of the infrastructure (such as airports and roads), there has been little investment and successive governments have largely overlooked the sector. The sector, in general, the cultural and natural attractions, and human resources that form the basis of the tourism product, in particular, have been completely neglected. Linkages to international tourism networks, both for marketing and research purposes, have also been neglected. Lack of coordination between stakeholders and the government resulted in poor infrastructure development and under developed tourist sites as well as a shortage of skille d workers in the sector. Generally, there was lack of marketing and promotional strategy as well as low awareness of tourism by local communities. In addition, the limited share of tourism earnings reaching the local community is affecting the sustainability of the sector and is havi ng a negative impact on the contribution of tourism towards poverty alleviation.

During the seventeen years that the Derg was in power, tourism declined drastically because of the adverse conditions created by war, recurrent draught, strained political and diplomatic relations with tourist generating countries, restrictions in entry into and travel within the country. In the years 1989 to 1992, records show that the country received on average 80,246 tourists and 23.2 million U.S. dollars annually. The average annual growth rates during those years were 2.1 percent for arrivals and 6.1 percent for receipts.

The basic measures taken after Year 1991 in order to realize the country’s economic and social development have created favorable conditions for the nation’s tourism development as well. Because the government believed that tourism has the power and capacity to assist in the effort to eliminate poverty and accelerate development sustainably, tourism has been included as one of the means of implementing the country’s plan for accelerated and sustainable development to end poverty.

According to the United Nations World Tourism Organization (UNWTO) data, Ethiopia registered an average annual growth in international tourist arrivals of 5.6 percent for the period 1990-2000, and 15.4 percent during the period 2000-2005.

The sector frther expanded, the second half of the last decade with the implementation of the PASDEP (The Plan for Accelerated and Sustained Development to end Poverty), from 2005 to -2010, and the consecutive double-digit growth.

In the four years from 2005 to 2008, average annual tourist arrivals were 324,664, while average annual revenue was 167 million dollars. Reports of the sector show annual growth rates of 21 percent for tourist arrivals and 19.5 percent for revenue for those four consecutive years.

However, in 2010, while Sub-Saharan Africa’s tourism market share is only 3.2 percent of global international arrivals, Ethiopia’s share within Africa’s share is a minuscule 1 percent, with close competitors such as Kenya and Tanzania claiming 4 percent and 2 percent of the same share respectively. By contrast, South Africa has a 32 percent share. Despite this minimal market share, nonetheless, the annual average growth rate of tourism arrivals to Ethiopia was higher than Sub-Saharan Africa’s average.

Therefore, the Government of Ethiopia (GOE) prioritized tourism development in its Growth and Transformation Plan (GTP) and tourism policy to optimize the existing tourism resources as a driving force of economic growth for the whole country.

In light of all these, the government planned to make Ethiopia one of the top ten tourist destinations in Africa by the year 2020 with an emphasis on maximizing the poverty reducing impacts of tourism and to change the international image and positioning of the country. The sector should be planned in a comprehensive way to foster the contribution of tourism on the general economic development of the country. The Tourism Commission was upgraded to the Ministry of Culture and Tourism (MoCT) in 2005. MoCT has, at the same time, the responsibility for cultural issues, which were taken care of by the Ministry of Youth and Sports previously.

Two new entities, the Tourism Transformation Council and the Ethiopian Tourism Organization, have been launched with the objective of transforming the industry and based on the necessity to coordinate the activities of various stakeholders in the industry. In particular, the Tourism Transformation Council, was established with the mandate to raise the standards of the industry to a higher level. The Council is drawn from members of various institutions as well as prominent personalities. In addition, tourist infrastructures in various national parks are being upgraded and renovation work on roads linking the parks with major roads and lodges is being carried out. Other measures include the protection of animals from illegal hunting in sanctuaries and parks, as well as the conservation of heritage sites. In a bid to satisfy international standards, as well as provide world-class services for leisure and travelers, Ethiopia is investing in the modernization and expansion of major infrastructures.

As a result, the stock of hotels in Ethiopia has increased sharply over the last few years. While tourist accommodation is available as the major attraction, improvement as well as new construction is taking place.

Overall, the sector have seen major progress, under the PASDEP, the GTP, and the three main national policies of the sector: the Cultural Policy (1995), the Wildlife Development Conservation and Utilization Policy and Strategy (2004), and the Tourism Development Policy, adopted by the Council of Ministers in August 2009.

The Inbound Tourist Arrivals in Ethiopia continued to grow from 76,844 in 1989, to 115,000 in 1999, 184,078 in 2004, 427,286 in 2009 and reaching 523,438 in 2011. The total number of hotel rooms and beds of all hotel establishments in Ethiopia was 19,025 and 24,083, respectively in 2011. A total of 37 investors have taken investment permit in Addis Ababa alone to construct hotels with star ratings in 2012/13.

Recent data show that the sector's progress under the GTP. In 2012, 52.3 million tourists visited Africa, out of which only 596,341 reached Ethiopia. In the first half of this Ethiopian budget year, 2013-2014, the Ministry of Culture and Tourism reported that the number of tourists showed an increase of 36% over the same period of the previous year. The government plans to collect US$3 billion from tourism by the end of the GTP, in 2015.

The capacity building works should be mentioned in this context, the Catering and Tourism Training Center (CTTC), which serves as a center for hands-on training in hotel and catering services have been training more than 600 students since 2006. In addition to Addis Ababa University, various universities in the regions of the country have opened Heritage and/or Tourism Management Departments (including Axum, Gondar, Awasa, and Madawalabu). In some of the main sites, there are also vocational institutions. For example, in Lalibela there is a Vocational Training Institute with about 290 tourism students registered annually. In Axum, the Axum University, Axum Business and Service College and the Vocational Education Training Institute together account for about 227 students registered annually.

The pro-poor dimension of this progress should not be overlooked.

The Church of St. George (Amharic: Bete Giyorgis) is a monolithic church carved out of rock in Lalibela, Amhara state, Ethiopia. The church was constructed in the 12th century by King Lalibela.

The tourism sector is an economic engine with the potential to create business and employment opportunities for the poor through generation of many and diverse jobs at all levels. Along the tourism value chain, many businesses are SMEs contributing to the sector’s valuable labor intensity. Comparative studies using this approach show that the impact in terms of poverty reduction varies greatly by country and that there are no fixed recipes for interventions; In some countries spending in the context of business tourism has a higher potential for poverty reduction, while in other countries cultural tourism has a greater impact.

In the context of Ethiopia, the study conducted by the Central Statistics Agency confirmed that tourism’s job-generation capacity by far exceeds that of the other labor-intensive sectors such as leather, floriculture and construction. Moreover, Ethiopian women are major beneficiaries of tourism’s employment-generation capacity. It was also confirmed that employment generated in the tourism sector is highly concentrated in SMEs, with an important number of unpaid family workers.

In conclusion, we shall quote a recent report by the prominent W Hospitality Group. The report confirmed both Ethiopia's progress as well as its pro-poor character:

Research undertaken by W Hospitality Group, the award-winning consultancy and one of the founding members of Hotel Partners Africa (HPA), reveals that employment in the hotel sector in Africa is set to grow substantially in the coming years. It estimates 136,000 new jobs will be created in 2014, 87,000 in 2015, 70,000 in 2016 and 27,000 thereafter based on current signed contracts from international brands plus regional brands and non-branded developments to come. Further jobs will be added to these totals as new deals are signed by the brands and others.

Whilst the overall headline number sounds impressive, the growth in demand for hotel workers varies substantially from country to country. Regionally the numbers are similar, with North Africa creating 115,000 jobs across 5 countries and Sub Saharan Africa (SSA) creating 165,000 across 23 countries. The 5 North Africa countries are in the top 10 in Africa while Nigeria leads the way in SSA with the creation of 53,000 jobs. It is followed by Ghana with 11,000, Angola with 9,000, Ethiopia with 8,800 and Uganda with 8,500.